Tax Deducted at Source or TDS is a source of collecting tax by Government of India at the time when a transaction takes place. The tax is required to be deducted at the time money is credited to the payee’s account or at the time of payment, whichever is earlier.
The government uses TDS as a tool to collect tax in order to minimize tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date. 
TDS is applicable on the various incomes such as salaries, interest received, commission received etc. 
A TDS Return is a quarterly statement which has to be submitted to the income tax department. Submitting TDS Return is mandatory if you are a deductor. It has details of TDS deducted and deposited by you. TDS Returns include details of PAN of the deductor and deductees, particulars of tax paid to the government, TDS challan information and other details as required in the forms.

Payments covered by TDS

Almost all common forms of payments are covered by TDS.

Following are the incomes covered under TDS:

• Salary
• Dividend
• Rent
• Transfer of immovable property
• Insurance commission
• Interest on securities
• Winning from lottery
• Winning from horse race
• Fees for technical or professional services
• Payment to contractor or sub-contractor
• Commission on brokerage
• Commission on sale of lottery tickets
• Repurchase of units of Mutual Funds
• Deposits under NSS( National Saving Scheme and many others)

Who is required to e-file TDS return?

Following deductors are required to compulsorily e-file their TDS Return:

• All Government Offices
• All companies
• Every person who is required to get his accounts audited
• Any other deductor, where number of deductees records in a return for any quarter of the financial year are 20 or more.

The process of TDS is followed by making payment of TDS. The first step in TDS payment is to obtain TAN number. TDS payments cannot be made without TAN number.
Every person or company or entity responsible for deducting TDS must mandatorily obtain a Tax deduction Account Number or TAN number. 

Every person or company or entity responsible for deducting TDS must mandatorily obtain a Tax deduction Account Number or TAN number. TAN number is a ten-digit alpha numeric number allotted by the income tax department on request.
Deductor who is liable to deduct TDS shall obtain TAN number and must quote the number in all returns. As per section 203A of income tax act, it is necessary for the asseesee to quote TAN in all the communications related to TDS and if they fail to do so, a penalty of Rs. 10,000 will be charged. TAN number can be easily obtained easily. A payment of specified amount is to be made for application of TAN number. Note that TAN is different from income tax permanent account number or PAN number.

• Deductor is then required to ct the challan 281 for TDS payment. After selecting the challan, Deductor needs to fill his TAN. TAN number would be checked for the validity online automatically.
• Once the TAN number is validated, Deductor is required to fill other details such as accounting head under which the payment is to be made, address, name etc.
• Deductor is required to confirm the information filled and submit the challan for the further process of making the payment.
• Once a deductor submits the challan, the website will automatically route to the net banking page whereby the payment of TDS is made by logging in into the net banking page.
• On successful payment of TDS, a challan counterfoil is displayed that contains Challan Identification Number (CIN), payment details and the bank name through which the payment is made. CIN number is mainly divided into three parts that contains BSR code (7 digits) of bank, date of deposit and challan serial number. The counterfoil is the proof of payment being made.
• Deductor can also check the status of challan on "Challan status enquiry" on NSDL - TIN website after a week of making payment using the CIN so generated.
• After depositing TDS to the income tax department, Deductor shall to issue FORM 16 (in case of salary), Form 16A ( in case of other income) and Form 26QB ( in case of property)or TDS certificate to the employee on quarterly/ annually.